The report provides insight from 443 plan sponsors, surveyed in May 2017, to help retirement plan professionals understand how reducing or even eradicating pre-tax contributions in qualified retirement plans under 401(k) and 403(b) tax plans would impact employers and employees. According to the survey, more than 90% of respondents suggest eliminating or reducing pre-tax contributions to retirement savings plans would do far more harm than good.

“These proposals could impact the more than 100 million Americans who participate in tax-qualified retirement savings plans. As the voice of America’s retirement savers and plan sponsors, PSCA is working with other benefits organizations to educate Washington’s policymakers on the potential impacts that changes to the tax code could have,” says Jack Towarnicky, executive director of PSCA. “These survey results will help inform policymakers on how certain changes may affect access to and participation in retirement plans.”

Additionally, the report finds almost 90% of employers feel eliminating or reducing pre-tax deferrals will dramatically reduce employee savings. On the other hand, over 90% believe future pre-tax savings limits on 401(k) and 403(b) plans should be indexed to inflation. More than half marked “strongly agree” when asked if they rely on 401(k) and 403(b) plans to attract and retain talented employees.

While most plan sponsors are pushing back in response to the possible reduction of tax-deferred savings, survey results show 85% of employers would continue to offer a plan should Congress reduce pre-tax savings limits. However, if Congress were to change the laws specifically to require contributions be made to Roth accounts, with taxes paid up front, rather than traditional 401(k) plans, that number falls to only 70% of employers sticking with it.

Three-fourths of respondents currently provide a Roth feature to employees, with 30% of plan sponsors reporting 10% to 20% of eligible employees making Roth contributions, and a quarter indicating only 5% to 10% of eligible employees are making these contributions. Of those refusing to hold Roth, 60% say they had weighed offering it and ultimately chose not to, and another 60% indicate their decision was due to cost concerns and administrative complexity in hosting Roth.